A Bridge to Sell(destroying old age security w/ fiscal deficits/Nat'l Debt

http://www.nytimes.com/2005/01/24/opinion/24mon1.html?oref=login&pagewanted=print&position=

January 24, 2005
EDITORIAL
A Bridge to Sell

One of the main talking points in the administration's drive to privatize Social Security is that retirees have nothing to fear. "If you're a senior receiving your Social Security check, nothing is going to change," President Bush said recently. Mr. Bush seems to presume that older Americans are indifferent to the future retirement security of their children and grandchildren. But even taken on its face, the argument does not hold up.<snip>

All told, by 2030, when today's 55-year-olds turn 80, the national debt would be as big as the economy itself, according to a calculation by the Center on Budget and Policy Priorities that uses data from Social Security and the Congressional Budget Office. To compare, consider that in the last 50 years, national debt has equaled only 38 percent of the economy on average, and that percentage includes the tremendous overhang of debt from World War II.

Large and virtually permanent fiscal imbalances could create severe hardship. At the least, big and ongoing deficits erode living standards because they reduce the money available for investment in the economy. At worst, enormous and endless deficits could provoke a loss of investor confidence, leading to higher interest rates and inflation, lower stock and bond prices, less household wealth, less government spending and slower economic growth.

If Congress faced that kind of crisis, it's safe to assume that everything would be on the table, including Social Security retirement benefits. This would be especially true if the crisis was provoked by privatization. The reason: diverting a portion of payroll taxes into private accounts - the centerpiece of Mr. Bush's privatization scheme - would greatly accelerate the exhaustion of the Social Security trust fund, unless the government made huge transfusions of other tax revenue into the fund. It could be difficult to justify such transfers with an economy in dire straits. A dwindling trust fund, in turn, could create a political dynamic for benefit cuts that would be hard to resist.

Even if Congress managed to keep the commitment to continued funding of full Social Security benefits for today's retirement-age population, senior citizens could find that their other sources of retirement income, especially stocks and bonds, had taken a hit. Their adult children would probably not be able to provide a safety net. Indeed, a country in fiscal crisis is one in which adults are more likely to turn to their elderly parents for help.

Despite the risks to their own economic well-being in retirement, some older Americans might be willing to support Social Security privatization if it would ensure a stable retirement for their children and grandchildren. But it wouldn't. Privatization would require potentially debilitating borrowing up front, in exchange for a drastically reduced benefit later on, no matter how well, or poorly, private accounts performed. So there's no reason for senior citizens to support it and plenty of reasons to oppose it. Mr. Bush is wily, and wrong, when he tries to dismiss older Americans from the debate.

spending money to "scare" people.

AAAARRRGGHHHHHHHHHHHHHHHHHHHHHHHHHHH.

I once thought the media was on the side of the viewers -

boy - was I wrong.

It will increase the investment pool, thus giving them, through the stock markets, more money to play with.

It's very simple, really.

"The natural right to be free of the debts of a previous generation is a salutary curb on the spirit of war and indebtment, which, since the modern theory of the perpetuation of debt, has drenched the earth with blood, and crushed its inhabitants under burdens ever accumulating." --Thomas Jefferson to John Wayles Eppes, 1813.

"We believe--or we act as if we believed--that although an individual father cannot alienate the labor of his son, the aggregate body of fathers may alienate the labor of all their sons, of their posterity, in the aggregate, and oblige them to pay for all the enterprises, just or unjust, profitable or ruinous, into which our vices, our passions or our personal interests may lead us." --Thomas Jefferson to John Wayles Eppes, 1813.